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Bond investors now have a very clear target figure heading into 2013: 6.5%.

No, that's not the forecast for bond returns next year (wishful thinking, that). It's the unemployment rate the Federal Reserve flagged this week when, for the first time, it made ending its zero interest-rate policy contingent on the U.S. economy hitting a specific economic threshold. (The current rate is 7.7%.) The Fed also specified a 2.5% tolerance for inflation.

Pay attention to these numbers. By pinning short-term interest rates to the floor, the Fed has pushed income-starved investors into ever-riskier classes of bonds and enabled extraordinary gains in fixed-income markets ranging from Treasuries to junk bonds over the past few years. This vast migration has left a trail of all-time low yields wherever investors have set foot.

We now know when the Fed plans to pull the plug on all of this. Once it finally starts raising the federal-funds rate, the Fed will assure that a broader range of rates will start to rise, if market pressures haven't already started forcing rates higher.

Once that process begins, you do not want to be left holding the bag. Rising rates will eat into the value of existing bonds, with bond investments becoming "wealth destroyers," in the words of Michael Gavin, head of asset allocation for Barclays.

That's pretty much the opposite of what you were looking for when you bought bonds. It's a key reason bonds look like awful investments at this point. But nobody wants to bail out too soon on any market that keeps posting improbable gains despite seemingly exhausting its upside (see real estate circa 2007, tech stocks circa 2000, tulips circa 1637, etc.).

Surveying the year-ahead outlooks that banks and analysts churn out this time of year, there's a broad consensus that goes something like this: Rates absolutely must start rising at some point, probably soon, but there's still a chance to squeeze another year of decent returns out of bonds before things get ugly.

Bank of America Merrill Lynch has tabbed 2013 the "inflection year" between the years of inflows bond funds have enjoyed and the outflows that await. Citi warns that certain bond markets have become crowded with complacent "backward-looking investors" pleased with recent returns but susceptible to longer-term pitfalls, and often oblivious to them.

WHICH BRINGS US TO ANOTHER inflection point, this one in bond mutual funds. When an asset class enjoys three decades of price gains, there's little reason to seriously explore strategies beyond basic long-only investing. Buy bonds, watch yields fall, enjoy coupon income and capital gains.

But now many managers are hawking their hedging strategies as a means for investors to capitalize on any run-up there is left, and protect them from when bonds inevitably start going in the other direction.

"The average fixed-income investor is not diversified at all," says Bill Eigen of JPMorgan Asset Management, citing unusually tight current correlations among a variety of bond markets. By using options, futures and other hedges, Eigen says, "it's never been cheaper" to protect against rising rates. Eigen's $13.6 billion
JPMorgan Strategic Income Opportunities
fund (ticker: JSOAX) has a conservative mandate, a 0.88% expense ratio, and has averaged 4.3% returns over the past three years.

Eigen thinks we're in a Fed-inflated bond bubble. "That doesn't mean it has to pop right away," he adds.

Beyond setting unemployment and inflation targets, the Fed last week boosted its quantitative-easing program, saying it will keep buying longer-dated Treasury bonds but will stop selling short-dated bonds as an offset. Treasuries subsequently sold off before rebounding Friday, with the 10-year note yielding 1.702 Friday, up from 1.627% a week earlier. The 30-year yield rose to 2.865% from 2.814%.